NCLAT Rules Appeal Against Liquidator Fee Directions Infructuous After SCC Fixes Remuneration
- REEDLAW
- Aug 26
- 3 min read
REEDLAW Legal News Network reports: In a significant decision, the National Company Law Appellate Tribunal (NCLAT) held that an appeal challenging the Adjudicating Authority’s procedural directions for fixing a liquidator’s remuneration becomes infructuous once the Stakeholders’ Consultation Committee (SCC) has determined the fees. The Tribunal clarified that after the SCC’s decision, no cause of action survives for further adjudication.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member), while adjudicating a batch of four Company Appeals, ruled that an appeal against the Adjudicating Authority’s directions on liquidator’s remuneration becomes infructuous after the Stakeholders’ Consultation Committee (SCC) finalizes the fees. The Tribunal emphasized that once the SCC determines the remuneration, there is no surviving cause of action for the appellate forum to consider.
The National Company Law Appellate Tribunal (NCLAT) dealt with four similar company appeals filed by the Liquidator of different Corporate Debtors, challenging orders passed by the Adjudicating Authority (NCLT) on 29.11.2024. These appeals arose from applications filed under Regulation 2(A) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, where the Appellant had sought directions to the Stakeholders’ Consultation Committee (SCC) and certain banks to contribute funds towards liquidation costs and approve remuneration of ₹1,50,000 per month until filing of the liquidation closure application. The Appellant also prayed for directions for filing dissolution applications under Section 54 of the Insolvency and Bankruptcy Code, 2016.
The NCLT had observed that there was no significant progress in the liquidation proceedings to justify such remuneration. It noted that realizations from the assets were nil or minimal, and that substantial work had not been carried out by the Liquidator post-appointment. Consequently, the NCLT disposed of the applications with a direction to the SCC to consider and approve only reasonable fees from the date of appointment of the Liquidator until filing of the dissolution application and to clear outstanding liquidation costs within four weeks, as per Regulation 2(A). The Liquidator was also directed to file the dissolution application upon receipt of such amounts.
The Appellant argued before NCLAT that earlier orders had recognized and approved the proposed remuneration and that the NCLT erred in relegating the matter back to SCC for determination. It was contended that the reliefs sought were in line with prior directions and approvals made in SCC meetings, and therefore, the impugned orders were inconsistent with earlier decisions. However, during the hearing of the appeals, it was brought to the notice of the Tribunal that the SCC had already, on 09.01.2025, determined the remuneration and incidental costs payable to the Liquidator, and this decision was not under challenge.
In light of these developments, the NCLAT held that the appeals had become infructuous and were premature because the impugned orders had not conclusively determined any adverse rights against the Appellant. Since the consequential decision of the SCC was neither challenged nor set aside, no effective relief could be granted. The Tribunal observed that procedural directions issued by NCLT could not be challenged independently without questioning the final decision taken pursuant to those directions. Consequently, all four appeals were dismissed as misconceived, with the NCLAT emphasizing that the Appellant had no surviving cause of action once the SCC had fixed the fees and expenses.
Mr. Y. Suryanarayana, Advocate, represented the appellant.
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